Jamie Dimon is optimistic about the US economy – at least for the next few years.
Dimon, longtime CEO and chairman of JPMorgan Chase, sees strong growth for the world's largest economy thanks to the U.S. government's response to the coronavirus pandemic, which, according to his annual shareholder letter, left many consumers with savings.
"I have little doubt that the US economy is likely to boom towards the end of the pandemic with excessive savings, new economic cutbacks, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine, and euphoria towards the end of the pandemic," Dimon said of the letter. "This boom could easily last through 2023 as all spending could extend through 2023."
Dimon, who led JPMorgan during the 2008 financial crisis and helped create the largest U.S. bank by asset, pointed out that the level of government spending during the pandemic far exceeded the response to that previous crisis. The longer-term effects of the reopening boom won't be known for the next few years as it will take time to determine the quality of government spending, including President Joe Biden's proposed $ 2 trillion infrastructure bill.
"Spent wisely, it will create more economic opportunity for everyone," he said.
65-year-old Dimon addressed a number of topics familiar to watchers of the country's most famous banker: fueling JPMorgan's efforts to create economic opportunity for left-behind Americans, and lifting the threat of US bank dominance Fintech and Big Tech actors emerged and commented on public policy and the role of companies in bringing about change.
While Dimon called stock market valuations "pretty high," he said a multi-year boom could justify current levels as markets price in economic growth and excess savings that find their way into stocks. He said there was "some foam and speculation" in parts of the market but didn't say exactly where.
"Conversely, in this boom scenario, it is difficult to justify the price of US debt (most people consider the 10-year bond to be the primary reference point for US debt)," said Dimon. "This is due to two factors: first, the enormous supply of debt that needs to be absorbed, and second, the unreasonable possibility that a surge in inflation will not be temporary."
While optimistic about the immediate future of the economy, the US faces major challenges, Dimon said. The country has been tested before – although conflicts that began with the civil war, the Great Depression, and the social upheavals of the 1960s and 1970s, he said.
"In any case, America's power and resilience have strengthened our position in the world, particularly with respect to our major international competitors," said Dimon. "This time can be different."
The past year has highlighted the challenges facing US institutions, elected officials and families as our country's rivals see a "politically torn and crippled nation, and racial and income inequality – and a country incapable of government policy (fiscal, monetary, industrial "to coordinate in every coherent way to achieve national goals."
Ultimately, the country must "go beyond our differences and self-interest and act for the common good," said Dimon. "The good news is that this can be fixed."
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